This paper presents a prototype implementation of smart meter that facilitates the migration of our existing conventional distribution systems towards the smart distribution system. This is a step forward towards implementation of smart grid system. The proposed smart meter that establishes a two-way wireless communication link between the consumer premise and service provider can provide a number of advantages and add-on features, such as, establishing flexible dynamic multirate tariff planning, identifying and locating the premise of system loss, and full time monitoring and subsequent decision-making. In particular, an improvement of the load shedding scenario in Bangladesh is proposed based on the analysis of the load shedding data furnished by Dhaka Power Distribution Company (DPDC). It is observed that a particular feeder can be operated with less frequent load shedding if the individual customer is allowed to operate within a reduced limit monitored by the novel smart meter.